'Gross domestic product, regularly used as an indicator of the size of a country's economy, does not factor in the benefits from nor the costs to the ecosystem,' said EEA Executive Director Prof. Jacqueline McGlade in her presentation at the expert workshop preceding the 'Beyond GDP' conference in Brussels this week.

Policy-makers need a supplemented GDP

'The free services that the ecosystem provides such as, air and
water should be measured, valued and added to the GDP for computing a
more inclusive aggregated measure, which we call inclusive domestic
product (IDP),' Prof. McGlade said.

Many negative impacts on the ecosystem such as over-harvesting,
waste disposal, fragmentation by dams, and sealing of soil for
development had no direct counterpart in GDP. As a result, the full
cost of producing and consuming goods and services is not reflected in
their ultimate market price. These ignored costs should be added to the
current production output and imports of countries, sectors and
companies enabling us to calculate the full cost of goods and services
(FCGS), she said.

These two additional measures could be a valuable tool for
policy-makers, enabling them to take more informed decisions on the
costs of action versus inaction, on environmental costs and where to
target ecological tax reform. However, such additional measures would
supplement GDP, not replace or adjust it, the EEA director
stressed.

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